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Q1 results for builders mixed; Horton announces smaller “express homes”

New home builders are seeing mixed results of late, and some are scrambling to answer weak first time buyer demand.



new home builder

Thomas Lawler, former senior vice president of Fannie Mae, and founder of Lawler Economic & Housing Consulting LLC, summarized the latest builder results for the first quarter. The nation’s largest home builder, D.R. Horton, reported the first quarter net home orders, were up from the comparable quarter of 2013. The 2014 quarter ended March 31, and totaled 8,569, which is up 8.8 percent from last year’s totals.

Horton’s average community count and home deliveries were both up. Their community count was up by 11 percent compared to 2013, whereas their home deliveries totaled 6,194, up a considerable 13.4 percent from the comparable quarter. The average sales price was $271,230, up 11.8 percent from a year ago. The company also experienced an increase in order backlogs, up 5.3 percent from last March totaling 10,059 orders. The company’s sales cancellation rate, however, remained the same as last year at 19 percent.

Horton announces “express homes”

According to Calculated Risk’s Bill McBride, this is in response to an overall weak demand from first-time home buyers, partly attributed to the home price increase over the past two years. McBride writes, “Horton announced in its conference call that is initiating a new product line called ‘express homes,’ which will be smaller and priced lower than its current product lines and will be targeted to first-time buyers.”

McBride added, “First-time buyers represented 42 percent of the purchase mortgages handled by its mortgage subsidiary last quarter, down from 50 percent in the comparable quarter of 2013.”

PulteGroup says orders are down

PulteGroup, the nation’s second largest home builder, reported net home orders for the end of the first quarter at a total of 4,863, down 6.5 percent from the comparable quarter of 2013. Even though net orders were down, the company said that absorptions per community were up from last year. McBride says this is due to the fact that Pulte has focused more on returns and less on expansion. Home deliveries were also down this quarter. Pulte reported a total of 3,436, down 10.4 percent from comparable quarter of 2013.

The company’s order backlog was also down at the end of March at 7,199, down 10.5 percent from last year. McBride notes, “company officials noted that absorption rates per community were up significantly from a year ago in its lower-priced Centex division, but that this gain mainly reflected the strong Texas market, and not strength in first-time buyer demand.”

Ryland reports home orders are up

Finally, the Ryland Group, the nation’s eighth largest home builder reported that net home orders were up at the close of the first quarter. They reported 2, 186, up 6.5 percent from 2013. Ryland’s community count was also up 18.8 percent from last year, but their average sales absorption rates were down by over 10 percent. Their home deliveries and order backlogs were both up compared to 2013’s figures. Home deliveries totaled 1,470, up 11.8 percent from 2013, while their order backlog totaled 3,342, up 6.6 percent from last year. Ryland owned or controlled 39,482 lots at the end of March, up 30.3 percent from last March and as astonishing 69.5 percent increase from two years ago.

Jennifer Walpole is a Senior Staff Writer at The American Genius and holds a Master's degree in English from the University of Oklahoma. She is a science fiction fanatic and enjoys writing way more than she should. She dreams of being a screenwriter and seeing her work on the big screen in Hollywood one day.


Why it’s about to get more expensive to get a mortgage

(FINANCE) Borrowing money is getting more expensive, especially for those looking to get a mortgage. But why?



money for transactions

Although there have been some blips, bonds have grown substantially in value since the 1980s. They’ve performed extremely well for a number of reasons, not least of which is the big slowdown in inflation over that time period.

The result, for investors, has been that anything “bond-lik,e” i.e. capable of paying a regular income – like a high-dividend stock or even a property like your home – has shot up in value. A reversal of bond prices would mean less support for such investments.

That’s what the economy is currently experiencing. According to Financial Times, American worker wage growth is hastening the sell-off of bonds by the US government, which is decreasing the overall price of bonds. As bond prices go down, the interest rates that they offer new investors go up. That rate jumped to 2.85 percent last Friday, the highest level since 2014.

Since the rates at which banks lend their money are largely based on the interest rates offered by bonds, regular folks looking to take out a mortgage or a loan are facing higher costs.

How does this work?

If we’re talkin’ bond prices, we’re talkin’ yield. When the price of a bond goes up, the yield of that bond goes down! Let’s say you’re getting paid $5 each year. If you pay $50 for that right, then you’re making a 10% “yield” (5/50 = 10%). But if you pay $100 for that right, then you’re making a 5% “yield” (5/100 = 5%).

It’s the same thing with the price of a bond because the amount a bond investor gets paid (usually) is fixed. And so, when the bond goes up in value, the “yield” goes down – and vice versa.

For realtors, its important to help clients shop for the best rates to improve their confidence in this market. Leveraging the right online and local financing resources can help potential buyers get the best deal. Explaining broader market context is also critical. Historically, a three percent interest rate is still very low.

According to Investopedia, mortgage rates averaged 7.81% in 1996 and 10.19% in 1986. Instilling confidence with information will put buyers and sellers in the right place to make moves.

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How does this soft jobs report impact the housing market?

(REAL ESTATE NEWS) When we see a soft jobs report, does that hurt or help the housing market? We talk to two economists about it.



In a year of political uncertainty, the release of any jobs report is polarizing. Political figures and armchair policy wonks will read into the data as they wish, but not housing economists.

That’s who we look to in these times, because we all know that jobs is the cure-all for a recovering economy, but payroll growth slumped in September as the U.S. Labor Department reports that employers added only 156,000 jobs.

This fell short of the 172,000 originally projected by economists surveyed by Bloomberg.

Hidden positives in the report

Dr. Ralph McLaughlin, Chief Economist at Trulia said, “While the September jobs report came in below expectations, the continued addition of jobs to the US economy will help buoy demand for homes, both on the for-sale and rental side of the market.”

He observed another positive hidden in the Labor Department result. “In addition, wage growth kicked up again, which will help bolster the savings of first-time homebuyers trying to scrape together a downpayment.”

Real estate remains unchanged

“Given no major surprise in the data, the national outlook for real estate market remains essentially unchanged, with home sales expected to squeak out slight gains in 2016 and 2017 while commercial building vacancy rates should continue to fall,” said NAR Chief Economist, Dr. Lawrence Yun.

Yun adds that “we should note that men have been underperforming as 68.4% of adults have jobs, down from historic norm of around 75%. Meanwhile, 55.8% of women have jobs, roughly matching the historic norms.”

Pointing out that the data is being “digested” through the perspective of the upcoming election, Dr. Yun notes that, “among men, those with a college degree 72% of adults are working while only 54% of those with only a high school degree are working.”

Dr. Yun observes, “There will surely be a big divergent voting patterns among men versus women and among those with college education and those without in November.”


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Mortgage companies hiring time travelers to uncover missing documents?

(MORTGAGE NEWS) – Mortgage companies are hiring for an interesting new position that may speak to their role in the economic crash of 2008.



During the Great Recession of 2008, it’s been estimated that around seven million Americans lost their home. Many of the homes that went into foreclosure did so because people lost their jobs, and just gave up on their home. In some, people got kicked out based on false documentation, faulty paperwork or just downright illegal mortgage servicing. Numerous lawsuits have been filed and won by homeowners who were wrongfully evicted.

In California, in Yvanova v. New Century Mortgage Corporation, the California Supreme Court ruled that plaintiffs held the right to contest foreclosures when documentation (in this case, a mortgage transfer that was allegedly void) was not handled correctly. The Court didn’t determine validity of the document in Yvanova’s case, just that she had the right to contest the foreclosure.

New jobs in mortgage documentation

According to David Dayen, who wrote Chain of Title, this phenomenon has brought new jobs to the market. Career Builder lists a job for a “Default Breach Specialist” posted by a recruiting firm in Jacksonville, Florida. The primary characteristics for this position:

“The Default Breach Specialist responsibilities include ensuring all breach letters are issued as required by investors, insurers and/or State Law.  Responsible for ordering title, reviewing title and all security documents to identify missing assignments needed to complete the chain of title prior to foreclosure referral.”

Seeking time travelers

According to Dayen, all the assignments of mortgage should have been prepared and recorded at the time of the sale or transfer. He questions why any mortgage company would need to order these documents.

In Yvanova’s case, it’s alleged that the mortgage was not converted into the trust in a legal fashion. In many of the cases involving foreclosure, third parties were hired to produce the paperwork that conveyed a mortgage into the trust. Dayen alleges that many of these companies “mocked up” documentation.

Although it is possible that the mortgage company is simply looking for someone to make sure everything is in the case file, it’s also possible (some would say highly likely) that some documents may never be found because they don’t exist.

The failure to follow the law as it pertains to property records is so bad that companies are now hiring chain of title specialists to manage the problem. This does not put the real estate industry in the best light.

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